Heathrow shutdown raises concerns over contingency planning
The closure of Britain's Heathrow Airport is set to affect the global aviation system for days at a cost of tens of millions of dollars, experts say, posing questions about why better contingency planning was not in place at the hub.
Experts were in shock at the scale of the outage, which has not been seen since the Icelandic ash cloud of 2010, as they tried to estimate the cost and breadth of the repercussions caused by a fire at a nearby electrical substation that knocked out the airport's power supply and its back-up power.
Heathrow processes around 1,300 flights a day, according to Eurocontrol. The blaze, which was reported just after 11 p.m. (2300 GMT) on Thursday, forced planes to divert to airports across Britain and Europe, while many long-haul flights simply returned to their point of departure.
The cost of the impact could total around 20 million pounds ($26 million) a day, said Paul Charles, a travel consultant, with no guarantee that Heathrow will reopen on Saturday given the vulnerability of the airport's power supply.
"A back-up should be failsafe in the event of the core system being affected. Heathrow is such a vital piece of the UK's infrastructure that it should have failsafe systems," Charles told Reuters.
Energy Minister Ed Miliband said the fire had prevented the power back-up system from working and that engineers were working to deploy a third back-up mechanism, adding the government was working to understand "what, if any, lessons it has for our infrastructure".
The closure is set to have days-long knock-on effects globally, leaving airline passengers stranded.
Airlines' carefully choreographed networks depend on airplanes and crews being in specific locations at specific times. Dozens of air carriers will have to hurriedly reconfigure their networks to move planes and crews around.
BACK-UP POWER?
"Even if the airport opens hopefully by the end of Friday, there will be impact running on several days because once aircraft are grounded somewhere away from an operation, they are stuck there with the crews operating the flights, and of course the customers, until those crews have been out to have the legally required rest periods," independent air transport consultant John Strickland said.
"And if the planes are not back, they can't do the follow-on flights, which means that we get cancellations in the days ahead."
Even a few minutes of delay can throw off the day's entire schedule and cause delays in other parts of the flight system.
In this case, experts are asking how Heathrow did not have more back-up power units that could be brought on site to restart electricity more quickly.
"I can't remember a piece of critical infrastructure being wholly shut down for at least a day because of a fire. I can't think of anything comparable," Tony Cox, an international risk management consultant, said.
This is not the first aviation sector outage in Britain that has raised concern across the industry and in the political sphere.
An outage of Britain's air traffic control system NATS in 2023 cost over 100 million pounds ($129 million), according to an independent review by Britain's Civil Aviation Authority, raising concerns about the stability of the system.
The Heathrow outage, especially if it drags on past Friday, is likely to raise similar alarms and lead to extensive public scrutiny, especially given that under consumer rights law, customers impacted will not be able to seek compensation from airlines as the delays are not their fault.
"Who actually picks up the bill ... remains to be seen because it will be a complex discussion and a heavy discussion certainly between the airport, the airlines, the electricity providers, insurance companies, of course, nobody will want to accept responsibility if it's possible not to," Strickland added. ($1 = 0.7730 pounds)
(Reporting by Joanna Plucinska and Andrew MacAskill in London, Dan Catchpole in Seattle, Tim Hepher in Paris; Editing by Alison Williams)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Gulf Today
20 hours ago
- Gulf Today
Trump's tax-cut bill could hold back projects
US President Donald Trump's tax and spending bill would make it harder for American critical minerals companies to compete with China because it eliminates a tax credit for boosting domestic production of nickel, rare earths and other materials used in advanced electronics and weaponry, reported Reuters. With Trump and Republican lawmakers aiming to cut government support for green energy projects, the US House of Representatives passed a version of his "One Big Beautiful Bill Act" last month that eliminates the so-called 45X credit. The Senate is now debating the bill. Former President Joe Biden's 2022 climate change law, the Inflation Reduction Act, created the 10% production credit — a reduction in corporate taxes for critical minerals extraction and processing. The tax break also covers solar, battery and wind projects. The version of the bill that passed the House treats government incentives for wind turbines the same as those for mining projects that many view as crucial for national security. Critical minerals companies now say their projects are collateral damage to the political feud over renewable energy. The tax credit is already law and part of the current federal budget. The nonpartisan Congressional Budget Office, which scores the cost of legislative proposals when asked by Congress, has not studied how much would be saved by removing the credit. The Republican majority in Congress is seeking savings to fund other priorities such as tax cuts, defense and balancing the budget. This month, the hard-right House Freedom Caucus said it "will not accept" attempts to "water down, strip out, or walk back the hard-fought spending reductions and IRA Green New Scam rollbacks achieved in this legislation." Miners, though, say they need the credit to compete with China. Beijing has halted exports of some critical minerals, used its control of rare earths to strike a trade agreement with Washington, and flooded global markets with cheap supply of nickel, cobalt and lithium. The traditionally conservative mining industry now finds itself in the unusual position of needing Washington's support to grow and, in some cases, survive. The owner of the only US cobalt mine went bankrupt this year after Chinese miners depressed global prices of that metal. "If we do not have that tax credit, critical minerals producers in the U.S. are at risk of succumbing to closures," said KaLeigh Long, founder and CEO of Westwin Elements, which is building the country's only commercial nickel refinery. Westwin might not be able to service its debt without the tax credit, Long said, noting the company's loans were modeled using the expectation it would be permanent. Last month, Long wrote a letter asking the Senate to keep the credit. It was co-signed by 30 industry executives. Any changes the Senate makes to the bill must be reconciled with the House version before being sent to Trump, observed Reuters. Several House members have admitted they did not read the entire bill before voting for it, including Congresswoman Marjorie Taylor Green, a Georgia Republican, and Congressman Mike Flood, a Nebraska Republican. The House version does include $2.5 billion to fund a critical minerals stockpile and $500 million for a Pentagon mining loan program, although large mines often cost far more, noticed Reuters. House Democrats unanimously voted against the bill but their criticism has focused on tax cuts they say will widen the deficit while requiring cuts in health care, food assistance, education, scientific research and other programs. "There's so many issues right now under consideration in Congress and this one isn't breaking through, but it will certainly break through when we have a shortage of minerals in five years," said Jeff Green, a critical minerals industry consultant.
Al Etihad
a day ago
- Al Etihad
Wall Street ends sharply lower as Iran retaliates against Israel attack
14 June 2025 00:41 NEW YORK (REUTERS)Wall Street ended sharply lower on Friday after Iran launched missiles at Israel in response to intensive Israeli strikes on prices surged nearly 7% on fears the conflict could disrupt crude supply from the Middle East. US energy stocks rose in tandem, with Exxon up 2.2% and Diamondback Energy rallying 3.7%.Airline stocks fell on fears that fuel costs could climb. Delta Air Lines lost 3.8%, United Airlines fell 4.4% and American Airlines declined 4.9%.Defense stocks climbed, with Lockheed Martin, RTX Corporation and Northrop Grumman all gaining over 3%.The S&P 500 declined 1.13% to end the session at 5,976.97 Nasdaq declined 1.30% to 19,406.83 points, while the Dow Jones Industrial Average declined 1.79% to 42,197.79 of the 11 S&P 500 sector indexes declined, led lower by financials, down 2.06%, followed by a 1.5% loss in information on U.S. exchanges was 17.9 billion shares traded, compared with an average of 18.2 billion shares over the previous 20 the week, the S&P 500 dipped 0.4%, the Nasdaq lost 0.6% and the Dow fell 1.3%. Photoshop maker Adobe fell 5.3% as concerns that the company's pace of AI adoption was too slow overshadowed an increased annual revenue forecast. Oracle jumped 7.7% to a record high, rallying for a second day after the technology company gave an upbeat forecast driven by demand for its AI dipped 2.1% and Apple lost 1.4%. Visa and Mastercard both fell more than 4% after the Wall Street Journal reported that major retailers are exploring cryptocurrencies that could eliminate the need for payment intermediaries. A tame consumer price report, softer-than-expected producer price data and largely unchanged initial jobless claims earlier this week helped calm investor jitters around tariff-driven price pressures. US Federal Reserve policymakers are widely expected to keep interest rates unchanged at their meeting next week. With investors betting the United States will reach trade agreements that reduce President Donald Trump's steep trade barriers, the S&P 500 is now trading just below its February record highs. The University of Michigan's Surveys of Consumers showed consumer sentiment improved for the first time in six months in June amid trade stocks outnumbered rising ones within the S&P 500 by a 6.1-to-one ratio. The S&P 500 posted 10 new highs and 6 new lows; the Nasdaq recorded 37 new highs and 131 new lows.
Gulf Today
a day ago
- Gulf Today
Trump's curveball at Japan tea giant's US expansion
Kentaro Okasaka and John Geddie, Reuters Top Japanese tea brand Ito En's latest push to win over health-conscious US customers with its traditional unsweetened brew has hit a new road bump: President Donald Trump's trade tariffs. The company, which splashed out on a tie-up with Major League Baseball star Shohei Ohtani and launched a less bitter tea to capture a bigger slice of the lucrative growth market, is now debating whether to hike prices or move some production across the Pacific, executives said in interviews with Reuters. The dilemmas facing Ito En can be found across Japan, the biggest foreign investor in the United States, as Tokyo's trade negotiators return to Washington this week to try and strike a deal to cushion the blow to its fragile economy. Makoto Ogi, Ito En's general manager of international business development, told Reuters the company may raise prices of its products in the US to compensate for Trump's 24% levy on Japanese goods set to come into force next month. The problem is their retailers and distributors may resist for fear of losing sales. "We may not be able to ask them to raise our prices despite what Trump is saying," he said. The last time Ito En raised prices in the US - by approximately 10% in 2022 - sales dropped by around 5%. The company said the decline reflected the price hike as well as factors such as COVID-19 that affected market conditions. The company is also considering making tea bags in the United States, and bottling drinks there rather than in Japan, Taiwan and Thailand as it does presently, Ogi and other executives explained during interviews in Tokyo. These details of the firm's potential plans to counter tariffs have not been previously reported. The executives did not disclose the costs of such moves. In its latest results released this month, Ito En reported its profit shrank by 8.2% in the year to April, but forecast an 11% jump this year. It set a modest 3.7% profit growth target for its US tea business, versus 20.7% growth achieved last year, an outlook partly related to tariffs, a company spokesperson said. Its shares rose to nearly a four-month high in the wake of the results, with its president later telling investors the forecasts were "conservative". Many Japanese firms have set up war rooms to chalk out plans to restructure supply chains or cut costs to offset tariffs and keep their US growth plans on track, said Mizuho Bank analyst Asuka Tatebayashi. A survey of 3,000 Japanese companies by export promotion organisation JETRO late last year before Trump's tariffs found the level of interest in US markets at the highest in nearly a decade, with food and beverage companies like Ito En the most enthusiastic. "When you talk to companies in Japan, the US comes first," said Tatebayashi, adding that they face shrinking domestic demand and are generally cautious about expanding into riskier emerging markets. For Ito En, the US has long been a market it is eager to crack. Five years ago, Joshua Walker, the newly-appointed head of U.S. non-profit Japan Society, hosted Ito En's North America head Yosuke Honjo in his New York office. Honjo gestured to the green-coloured bottles of their flagship 'Oi Ocha' brand lining the shelves and said he wanted them to spread around the world like Coca-Cola's red bottle. "It was refreshing. Japanese companies would not normally have ambition of that type of grandeur," said Walker, recounting the executive's previously unreported remarks. Honjo, via a company spokesperson, confirmed the remarks. Founded in the 1960s by Honjo's father and uncle, Ito En has grown to dominate Japan's tea market, using around a quarter of the country's total crude tea production. Since expanding into the US in 2001, it has dabbled in selling sweet and flavoured tea varieties familiar to Americans. But more recently it has focused on the unsweetened tea popular in its home market, hoping to tap health-conscious customers and a boom in Japanese food and cultural exports. Honjo said growth has also been aided by a sharp rise in Asian Americans, estimated at nearly 25 million in 2023, or around 7% of the U.S. population, according to the Pew Research Center. Japan's exports of green tea surged 24.6% to 36.4 billion yen ($251 million) last year, with nearly half destined for the United States, official data showed. Some equity analysts like Jiang Zhu of Tokyo-based rating agency R&I have highlighted the high marketing cost of Ito En's international push at a time it faces tough competition at home from tea brands such as Coca-Cola's Ayataka. The company said it has around a 2% share of the US market for tea beverages, ranking eighth largest, with Unilever's Pure Leaf leading the sector. But it has a long way to catch up with the 3.9 billion gallons of Coca-Cola's trademark Coke drinks sold in the US last year, at only 3.1 million gallons by comparison, according to research firm Beverage Marketing Corporation. "Kikkoman's soy sauce is probably in every American household now, but it took about 50 years for it to become a part of the culture," said Akihiro Murase, Ito En's public relations manager, referencing the Japanese food manufacturer as a template for success. "We are not there yet but we would like to make unsweetened green tea a part of the food culture," he said.
